Big Win for Small Businesses

TURN won small businesses similar protections against draconian back-billing rules that we have defended for residential customers. Back-billing often occurs due to utility error or meter malfunctions, and can result in huge, unexpected utility bills, and can literally bankrupt a small business.

For Immediate Release From The Utility Reform Network

Thanks to TURN, small business will no longer be subject to draconian back billing rules, instead enjoying similar protections to the ones TURN has defended for residential customers. Back-billing often occurs due to utility error or meter malfunctions, and can result in huge, unexpected utility bills. TURN strongly supported AB 1879, an effort by Assemblyman Jim Beal to legislate better back billing rules that is now unnecessary.

"Huge back-bills can literally bankrupt small business without a lot of extra cash," said TURN staff attorney Nina Suetake. TURN advocated for the same limits that apply to residential customers; 3 months in cases of utility error. The previous rules inexplicably allowed utility companies to hold small businesses responsible for up to 3 years of back charges due to utility billing or meter error.

"Deposits on top of those bills were creating an additional burden for business customers who were hit with huge back bills and fell behind on payments," Suetake said. "Now, no additional deposit will be required for a small business to restore service in back billing cases, and all deposits for small businesses will have new limits.

Although the Commission did not go as far as TURN had hoped in forbidding deposits to re-establish service and late payment deposits, we did win better restrictions on the size of the deposit, which will now be limited to 2 times the average monthly bill. In addition, deposits cannot be charged when service is being re-established after failure to pay back charges.

Small business customers are customers that either:

  • Use less than 40,000 kilowatt-hours a year or use less than 20 kilowatts at a time (known as the energy demand) or use fewer than 10,000 therms of gas a year; or
  • Qualify as a microbusiness under Gov C—14837. 2. "Microbusiness" is defined as a small business which, together with affiliates, has average annual gross receipts of two million five hundred thousand dollars ($2,500,000) or less over the previous three years, or is a manufacturer—with 25 or fewer employees.

Suetake said that "in these difficult economic times, it is good to know small business can no longer be subject to the huge, unfair utility bills the previous rules allowed. PG&E, SoCal Edison, SDG&E and SoCal Gas have 60 days to implement the new, improved rules."